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Upholding a trial court’s ruling confirming an arbitration award, a California appellate court held that California law does not permit a court to vacate an award based upon an arbitrator’s alleged legal error.
In Bruinbilt, LLC v. Somoza, No. B193703, 2007 WL 2696508 (Cal. Ct. App. Sept. 17, 2007), Bruinbilt entered into an agreement with Persistence Capital to purchase five pools of life insurance policies as investments. Bruinbilt invested $7.5 million dollars, and Somoza and Coberly signed personal guarantees for the enterprise.
Bruninbilt later sued Somoza for breach of contract, fraud, conversion, and theft. Somoza’s attorney successfully moved to compel arbitration pursuant to an arbitration provision in the guarantee provision. The arbitrator awarded Bruinbilt $8,737,500.00 in compensatory damages, $15,000,000 in punitive damages, and $1,054,851.79 in fees and costs.
Bruinbilt moved to confirm the award. Somoza moved to vacate the award, arguing that the arbitrator erred by refusing to grant a continuance to allow Somoza’s former attorney to testify at a later time, as Somoza’s attorney had to appear in court on an unrelated matter when the arbitration was taking place. The trial court confirmed the award and Somoza appealed.
The Court upheld the award because under California law, an alleged error of law is no basis for vacating an arbitration award. Somoza failed to demonstrate that his former attorney’s testimony would have altered the outcome of the arbitration proceeding. Further, Somoza could have compelled his former attorney’s attendance by obtaining a subpoena. Finally, the arbitrator’s decision was reasonable as he had already granted an earlier continuance and warned that he would not permit further delay.
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